In wrapping this up, however, it’s worth noting that the commodity price constraint may be less of a durable feature of the world economy than many imagine. As people are only beginning to appreciate, the rapid rise in oil prices over the past decade has triggered an extraordinary supply response. Efficiency gains have been substantial and both exploration and innovation in extraction have taken off.

In a fascinating post here, Michael Pettis explains that hard commodity prices in general might be in for a long and steep decline. His story centres on China. In a very short period of time, China went through a phase of very rapid economic growth, focused on the most resource-intensive aspects of catch-up. Soaring demand butted up against unprepared supply channels to generate spiking prices. Supply is responding to that price spike but on a lag. And so lots of new capacity is coming online now. But China’s economy is now moving into a phase in which growth is likely to slow and the resource-intensity of growth is likely to slow. Resource-intensive growth may now shift to other emerging markets, but the world’s fancy new resource-extraction capacity is unlikely to have to digest another huge lump of growth like the one experienced in the past decade any time soon.